The Ultimate Relative Price Change

This chart from Mark Perry goes a long way in capturing the decline in purchasing power of many Americans as the population ages (and gets heavier).   We suspect the relative price shift is not fully captured in the Consumer Price Index (CPI).

This chart is similar to the McWage index we posted on Friday, where the hourly wage at a McDonalds is measured by how many Big Macs it can purchase  and then compared across countries.   The chart below illustrates that the real average hourly wage versus a couple baskets of electronics has increased dramatically from 1958 to 2012.  The converse is true for health care, however.

Leave it to economists to make hedonic quality adjustments on the health care services, however.   After all, eye surgery was, say $200 in 1958 and done with a hacksaw.   Today it is, say, $100K,  but the surgery is done with a laser.   Adjust for increased quality of the service and, thus,  no inflation.

We’re exaggerating, but you get the point, no?

Dec22_HeatlCare(click here if chart is not observable)

This entry was posted in Inflation/Deflation, Innovation and tagged , , . Bookmark the permalink.

1 Response to The Ultimate Relative Price Change

  1. The Wolf says:

    A reblogué ceci sur le blog a lupus…un regard hagard sur l'écocomics et ses finances…. and commented:
    Add your thoughts here… (optional)

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